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Choosing the Right Credit Card for Your Business


According to CardHub.com, there are several key reasons a small business uses credit cards: to earn rewards, to fund the business, to decrease the cost of existing debt, and to build a credit history.

To help shed some light on what really matters the most, we spoke with our resident expert, Rick Miller, who is First Bank’s Director of Bank Card Services. As he shared his insights, it became clear that Miller is someone who not only knows, but also truly cares about helping business owners make the smartest choices possible.

How You Pay and What You Get

When deciding which credit card is best for your business, Miller says, you need to think about how you prefer to make your everyday or monthly payments. Cash? Check? Online banking? Wire? Debit card? Credit card?

“The right card is the one that allows you to make payments in the way that is the best for your business,” he explains. In your evaluation, consider the most convenient and efficient process for you. What else are you getting out of this relationship beyond a line of credit?

“It’s important that business credit cardholders go with the choice that gives them the best bang for their buck,” Miller says. Like a card that comes with a solid rewards program, which should give you the most reward points for the everyday, regular purchases you are already making, such as utility bills, health insurance, or the company cell phone.

When looking at rewards between cards, Miller advises you to do an “apples to apples” comparison. For instance, one card may give you 1 point for every dollar spent, while another may give you 1.25 points. This differential may not seem significant at first glance, but these points can really add up over time.

Cash Flow Consideration

“I tell small business owners that the most important thing is to optimize cash flow. That’s the lifeblood of every business,” Miller says. A credit card, he explains, can be a wonderful cash flow tool that enables you to get working capital for your day-to-day operations.

Miller advises going with a credit card that offers a “float” or grace period, which allows your business to reach out to vendors, structure better payment plans and negotiate better terms.

When it comes to viewing credit cards as a powerful tool for small businesses, Miller isn’t alone in his assessment that cash flow has a ripple-like growth effect.

Without credit cards and the cash flow flexibility they can offer, some small businesses would simply be unable to expand. And when small businesses are unable to expand, the economy as a whole is negatively affected.

In fact, according to a 2010 report prepared for the American Bankers Association, “Business credit cards are an important contributor to small business success and U.S. economic performance… the expanded use of credit card credit by small businesses has significantly increased national employment and income levels.”

Check – and Re-Check – the Fees

When evaluating credit cards for your business, you also want to look at the various fees associated with the card. While a recent Forbes article proclaimed that “credit card fees are killing small businesses,” the news overall isn’t that dire.

Some cards do offer special 0% introductory rates when you transfer a balance over from another card. Such rates can offer great opportunities for freeing up cash flow. Of course, you need to be aware of exactly when the special rate ends, and what your responsibility will be after that point.

“A lot of companies that claim to offer a 0% intro rate will then charge a balance transfer fee,” Miller explains. “Make sure that the credit card offer you are going with is one with no hidden fees and no hidden charges.”

Another factor to consider is whether a card charges an annual fee—an avoidable and unnecessary expense. Some banks (including First Bank) offer business customers an online calculator that shows them exactly how much they can save by switching from one card to another, taking fees and other factors into account.

Be sure to seek these kinds of resources out when you can.

Take It Personally

Even though this is a business credit card search, it can be a very personal process as well.

According to Miller, who says his business bankers are on a first-name basis with most of their account holders, many business customers prefer to go with a local or regional bank for their credit card business.

His team reports that these business customers feel more comfortable and better taken care of on the local level. “As a community bank, we really try to provide everything a business needs to grow and prosper, and many of our customers are looking for that kind of attention,” he says.

Ultimately, even with cash flow planning, rewards, fees and all of the other “ingredients” that go into this business credit card decision, it is often the personal relationship that seals the deal for many owners.

Ready for the card with a great introductory rate, $0 balance transfer fee, a robust rewards program, and incredible security and anti-fraud features? Check out First Bank’s Business World Elite Rewards Mastercard today.

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